Noel Tata's resistance to IPO creates an internal rift

Noel Tata's resistance to IPO creates an internal rift

Tata Group, one of India's largest conglomerates, is witnessing an internal conflict over the proposed initial public offering (IPO) of its holding company, Tata Sons.

The dissent is led by Noel Tata, the scion and great-grandson of founder Jamsetji Tata.

Two trustees at Tata Trusts are likely to push for the listing in line with Reserve Bank of India (RBI) rules.

Tata Sons will be classified as shadow bank

Under new RBI rules effective July 1, Tata Sons will be classified as a shadow bank, eventually making it mandatory for the company to go public.

This isn't the first time RBI has asked Tata to list. In 2022, it classified Tata Sons as an "upper-layer" non-banking financial company with a three-year deadline to go public.

The group managed to stay private by restructuring its debt and petitioning the RBI that it be classified as a non-systemic entity.

Noel firmly against the idea of an IPO

Noel Tata, who heads the Trusts, has been firmly against the idea of an IPO.

He even asked Natarajan Chandrasekaran, chairman of Tata Sons, to ensure that the holding company wouldn't have to list when his reappointment was being discussed.

When Chandrasekaran refused to give that assurance, the board deferred voting on his reappointment due to differences over financial losses in some business units.

Meeting to focus on appointing new nominees by charities

The May 8 meeting will also focus on appointing new nominees by the charities to the Tata Sons board.

This strategic move will help Noel consolidate his influence over the group's future direction.

With less than two months before RBI's rules come into effect, Tata Sons is awaiting informal guidance from the regulator while considering whether to seek more time for compliance.

RBI not inclined to grant exemption for listing delay

The RBI has reportedly told the Tata trustees that it is not inclined to give an exception for the conglomerate.

The regulator has already sought legal opinion on the matter and sent its view to the federal government for final review.

The rationale is that any exemption to Tata Sons will lead other entities to make similar demands, potentially complicating the regulatory landscape and setting a bad precedent.